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Viper Consumes Swallowtail

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Viper Energy Partners, a subsidiary of Diamondback Energy, is to buy mineral and royalty interests from Swallowtail Royalties in exchange for 15.25 million units of Viper common stock and $225m in cash, which is expected to be funded through a combination of cash on hand and borrowings under the company’s credit facility.

The purchase includes 2,302 net royalty acres primarily in the Northern Midland Basin; roughly 65% of acreage is operated by Diamondback. The purchase is expected to be accretive to near-term cash available for distribution per common unit and anticipated to grow significantly over time because of accelerated development by Diamondback. It increases Viper’s Diamondback-operated acreage by over 10% to 14,191 net royalty acres.

“This acquisition checks all the boxes in what we look for at Viper. The acreage is Tier 1 and primarily operated by Diamondback, we expect it to be accretive to near-term financial metrics, and there is significant long-term value to be created based on Diamondback’s expected multi-year forward development plan,” said Travis Stice, CEO of Viper’s General Partner.

“The large, contiguous block of primarily undeveloped acreage in the Sale and Robertson ranches will drive oil production growth for Viper, which in addition to the strong current production levels on the third party operated acreage, will support our current strong free cash flow generation for the next several years,” he continued.

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